Global Fabrics Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-2(1)(1), Ahmedabad

ITA 2959/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8363 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 11-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Section: 143(3); 194C

Judgement Text

ITA NO.2959/AHD/2016 A.Y. 2012-13 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO.2959/AHD/2016 ASSESSMENT YEAR: 2012-13 GLOBAL FABRICS PVT. LTD. VS. INCOME TAX OFFICER, 87, HIRABHAI MARKET, WARD 2(1)(1), AHMEDABAD. KANKARIA ROAD, AHMEDABAD 380 0-22. [PAN AAACO 7014 P] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BHADRESH GANDHAKWALA, A. R. RESPONDENT BY : SHRI SAURABH SINGH, SR. D.R. DATE OF HEARING : 01.05.2018 DATE OF PRONOUNCEMENT : 02.05.2018 O R D E R PER PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 06.10.2016 ARISING IN THE ASSESSMENT ORDER DATED 09.02.2015 PASSED BY THE ASSESSING OFFICER UNDER SE CTION 143(3) OF THE INCOME TAX ACT, 1961 CONCERNING A.Y. 2012-13. 2. IN THE CAPTIONED APPEAL THE ASSESSEE HAS CHALLEN GED THE ACTION OF THE CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.5,52,562/- UNDER SECTION 40(A)(IA) ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED THE PARTICULARS OF ALL PAYEES/CONTRACTORS IN THE PRESCRIBED FORM TO THE PRESCRIBED AUTHORITY IN TIME . 3. BRIEFLY STATED, THE ASSESSEE IS A DEALER IN SUIT ING & SHIRTING. THE ASSESSEE IN THE COURSE OF CARRYING ON ITS BUSINESS INCURRED CER TAIN FREIGHT AND TRANSPORTATION CHARGES WHICH INCLUDES AN AMOUNT OF RS.5,52,562/- W HERE IT IS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE AS CONTEMPLATED UNDER SECTION 194C OF THE ACT. HE ACCORDINGLY INVOKED PR OVISIONS OF SECTION 40(A)(IA) OF THE ACT AND ADDED THE AFORESAID AMOUNT TO THE TOTAL INC OME OF THE ASSESSEE. ITA NO.2959/AHD/2016 A.Y. 2012-13 PAGE 2 OF 4 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND SUBMITTED THAT THE ASSESSEE HAD FILED PRESCRIBED FORM NO.26Q WITH THE PRESCRIBED AUTHORITY AS CONTEMPLATED UNDER RULE 31A OF THE INCOME TAX RULES 1962 READ WITH SECTION 194C OF THE INCOME TAX ACT 1961. IT WAS CONTENDED THAT IN VIEW OF THE FACT THAT THE PRESCRIBED INFORMATION (PAN) WAS OBTAINED FROM THE CONTRACTORS AND RETURN IN FORM NO.26Q WAS FILED BEFORE THE PRESCRIBED AUTHORITY, T HERE WAS NO STATUTORY OBLIGATION TO DEDUCT TDS ON PAYMENTS MADE TOWARDS TRANSPORTATION CHARGES. IT WAS FURTHER CONTENDED THAT ANY DELAY OR DEFECT IN FILING THE RE TURN IN FORM NO.26Q HAS SEPARATE CONSEQUENCES AS PRESCRIBED UNDER THE INCOME TAX ACT BUT THAT BY ITSELF WILL NOT COMPEL AN ASSESSEE TO DEDUCT TDS UNDER SECTION 194C OF THE ACT. IN THE ABSENCE OF ANY STATUTORY OBLIGATION TO DEDUCT TDS, SECTION 40( A)(IA) WILL NOT COME INTO PLAY. THE CIT(A), HOWEVER, DID NOT FIND MERIT IN THE PLEA OF THE ASSESSEE AND REJECTED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IT IS THE CASE OF THE ASSES SEE THAT DISALLOWANCE UNDER SECTION 40(A)(IA) IS NOT PERMISSIBLE AS NECESSARY INFORMATI ON FROM THE CONTRACTORS FOR NON- DEDUCTION WERE OBTAINED AND AS A SEQUEL THERETO RET URN IN THE PRESCRIBED FORM WAS FILED BEFORE THE PRESCRIBED AUTHORITY ALBEIT LATE. WE FIND THAT IDENTICAL ISSUE CAME UP FOR ADJUDICATION IN ITO VS. M/S. GLOBE CARGO SERVIC ES IN ITA NO.434/RJT/2011, ORDER DATED 01.05.2018, THE OPERATIVE PARAGRAPHS OF THE A FORESAID ORDER IS SELF EXPLANATORY AND, THEREFORE, REPRODUCED HEREUNDER FOR REFERENCE: 7. ON CAREFUL CONSIDERATION OF THE PROCESS OF REAS ONING RECORDED BY THE CIT(A), WE DO NOT SEE ANY FALLACY IN THE CONCLUSION DRAWN BY THE FIRST APPELLATE AUTHORITY. IT IS INTER ALIA OBSERVED THAT THE REQU ISITE FORM NO.15-I DECLARATION FOR NON-DEDUCTION FROM THE TRANSPORTERS, TO WHOM TOTAL PAYMENTS OF RS.40,73,960/- MADE, WERE FILED IN THE COURSE OF ASSESSMENT PROCEE DINGS. THIS ASPECT REMAINS UNCONTROVERTED. THIS GROUND ALONE IS SUFFI CIENT FOR NON-APPLICABILITY OF SECTION 40(A)(IA) OF THE ACT. IDENTICAL ISSUE CAME UP BEFORE THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS. CHIT TOOR DISTRICT CO-OPERATIVE CENTRAL BANK LIMITED IN ITA NO.1581 & 1582/HYD/2014 . THE RELEVANT OPERATIVE PARAGRAPHS DEALING WITH THE LEGAL POSITION ON SIMIL AR FACTS ARE REPRODUCED HEREUNDER:- 11. WE HAVE ALSO EXAMINED THE IMPUGNED ISSUE FROM A DIFFERENT PERSPECTIVE, AS SOUGHT TO BE CANVASSED BY LEARNED A R. THE QUESTION IS WHETHER S.40A(IA) CAN BE INVOKED WHEN THE REQUISITE FORMS AS PRESCRIBED UNDER STATUTE FOR NON-DEDUCTION HAS BEEN OBTAINED FROM THE ITA NO.2959/AHD/2016 A.Y. 2012-13 PAGE 3 OF 4 DEDUCTEE ALTHOUGH NOT FILED BEFORE PROPER AUTHORITY . THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IS REPRODUCED HEREUNDE R TO EXAMINE THIS ASPECT OF THE MATTER :- 40. AMOUNTS NOT DEDUCTIBLE NOTWITHSTANDING ANYTHIN G TO THE CONTRARY IN SECTIONS 30 TO 38, THE FOLLOWING MOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDE R THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION ' ,- (A) IN THE CASE OF ANY ASSESSEE (I) ....... (II) (IA) ANY INTEREST, COMMISSION OR BROKERAGE, RENT, R OYALTY, FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SER VICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONT RACTOR OR SUB-CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT AN Y WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WO RK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVI I-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, [HAS NOT BEEN PAID.... (ONLY RELEVANT PORTION EXTRACTED). ' THE PROVISION NOTED ABOVE SPELLS OUT THAT THE AMOUN T CANNOT BE ALLOWED AS DEDUCTION ONLY IN THE EVENT WHEN TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDU CTED OR, AFTER DEDUCTION HAS NOT BEEN PAID. IN THE PRESENT CASE, I T IS THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX IN TERMS OF THE PROVISIONS OF SECTION 194A. WE NOTE THAT SEC TION 194A IS FURTHER QUALIFIED BY SECTION 197A(1A) WHICH IS A NON-OBSTAN TE CLAUSE. SETIONL97A(LA) PROVIDES THAT LIABILITY TO DEDUCT TA X UNDER SECTION 194A CEASES WHEN A DECLARATION IN WRITING IN DUPLICATE I N PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER. RECEIVED BY A PE RSON RESPONSIBLE FOR PAYING INCOME TO THE PAYEE. THE REMEDY TOWARDS DEFA ULT FOR NON- FURNISHING OF THE DECLARATION TO THE COMMISSIONER O F INCOME TAX AS PRESCRIBED HAS BEEN ADDRESSED UNDER SECTION 272A(2) (F) OF THE ACT BY IMPOSING SUITABLE PENALTY THEREON, HOWEVER, ONCE FO RM NO,15G/FORM 15H WERE RECEIVED BY THE PERSONS RESPONSIBLE FOR DE DUCTING TAX, THERE IS NO LIABILITY TO DEDUCT TAX AT SOURCE IN VIEW OF SEC TION 194A R.W.S. 197 A. ONCE, IT IS HELD THAT TAX IS NOT DEDUCTIBLE AT SOUR CE UNDER SECTION 194A ON RECEIPT OF PRESCRIBED FORM, THE MISCHIEF PROVIDE D UNDER SECTION 40(A)(IA) IS NOT ATTRACTED. 12. WE FIND THAT NO DEFAULT CAN BE SAID TO HAVE OC CURRED IN TERMS OF THE PHRASEOLOGY PROVIDED UNDER SECTION 40(A)(IA) OF THE ACT IN THE FACTS OF THE CASE. ACCORDINGLY, WE HOLD THAT THE CIT(A) R IGHTLY CANCELLED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 40(A)(IA) OF THE ACT DUE TO MERE NON-FILING OF IMPUGNED FORM NO. L5G/15H ETC. WITH THE APPROPRIATE AUTHORITY. WE HAVE ALSO PERUSED DEC ISION OF THE ITAT IN THE CASE OF KARWAT STEEL TRADERS V/S. ITO (ITA NO.6 8322/MUM/2011 ORDER DATED 10.7.2013) RELIED UPON BY THE CIT(A) IN THIS REGARD. WE FIND ITA NO.2959/AHD/2016 A.Y. 2012-13 PAGE 4 OF 4 THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS IN THE CASE OF KARWAT STEEL TRADERS WHEREIN THE TRIBUNAL HAS TAKEN A FAVOURABLE VIEW ON THE SIMILAR FACTS. RESPECTFULLY, FOLLOWING THE O RDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, WE HOLD THAT TDS IS NOT DEDU CTIBLE ON RECEIPT OF FORM NO.LSG AND ACCORDINGLY, SECTION 40(A)(IA) OF T HE ACT IS NOT APPLICABLE IN THE FACTS OF THE CASE, THUS, ASSESSEE SUCCEEDS ON THIS SCORE ALSO. 8. IN PARITY, WE FIND THE CONCLUSION DRAWN BY THE C IT(A) FOR NON-APPLICABILITY OF PROVISIONS OF SECTION 40(A)(IA) IN THE FACTS OF THE CASE ARE ON A SOUND LEGAL FOOTING AD THUS REQUIRE NO INTERFERENCE THEREWITH. WE THUS ENDORSE THE ACTION OF THE CIT(A) IN TOTO AND DECLINE TO INTERFERE. WE THUS DO NOT CONSIDER IT EXPEDIENT TO EXAMINE OTHER LINE OF ARGUMENTS ADVANC ED ON BEHALF OF ASSESSEE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 7. IN VIEW OF THE UNCONTROVERTED FACT THAT REQUISIT E RETURN IN THE PRESCRIBED FORM WAS ULTIMATELY FILED ALBEIT BELATEDLY, THE ASSESSEE COULD NOT HAVE DEDUCTED TDS ON RECEIPT OF SPECIFIC INFORMATION FROM THE PAYEES/CON TRACTORS. THEREFORE, IN THE ABSENCE OF ANY LIABILITY TO DEDUCT TAX AT SOURCE UNDER SECT ION 194C OF THE ACT, PROVISIONS OF SECTION 40(A)(IA) OF THE ACT DOES NOT GET TRIGGERED . HENCE, IN PARITY WITH THE DECISION OF THE CO-ORDINATE BENCH IN GLOBE CARGO SERVICES (S UPRA), WE FIND THE ACTION OF THE REVENUE AUTHORITIES TO BE UNSUSTAINABLE IN LAW. CON SEQUENTLY, THE ADDITION/ DISALLOWANCE MADE BY THE ASSESSING OFFICER IN TERMS OF SECTION 40(A)(IA) OF THE ACT IS DIRECTED TO BE DELETED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 9. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF MAY, 2018. SD/- SD/- (MS. MADHUMITA ROY) (PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, THE 2 ND DAY OF MAY, 2018 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER UE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD